Last month (August 1998), during one of the most stressful points in the market performance, our largest portfolio, Financial and Metals, was up (an estimated) 17.7%. Of the $2.4 billion that we manage, I think just slightly over half of it is in the Financial and Metals Portfolio.This was not a direct result of the decline in the U.S. market – as I said we don’t trade in the S&P 500 – but rather an example of the typical predictable investor behavior in the face of trouble. In reverting to rule of thumb, in this case the flight to quality, global bonds rose, global stock market plunged, and a shift in foreign exchange rates occurred. However, the magnitude of the moves was the only real surprise for us. The trends which were demonstrated during late August had been in place for weeks or months beforehand.John W. Henry
